Holiday outlook cautiously optimistic ahead of Black Friday

Holiday projections are upon us: the talking heads are already making all sorts of predictions about hot toys, hot categories, how much we'll spend and where we'll shop. Will holiday spending be up or down? Will electronics be popular and will retailers keep offering huge deals?

We suspect the answer to these last two items will be yes, but we turned to an expert for more details.

Kantar Retail is a research and consulting firm that often works closely with the National Retail Federation. Last year, Kantar's holiday projections were spot on and for 2010, the company is projecting that holiday spending will rise a modest 2.5%, down somewhat from the same period last year, when spending increased just 1.1%.

If you're already planning and buying, odds are good you have young children at home and are looking for deals, particularly on hot toys, or are an affluent shopper who can afford it, say the experts at Kantar. Younger shoppers, specifically those in their '20s dubbed "Generation Y," are more likely to wait and are more likely to shop online.

In fact, online shopping is again expected to increase at the expense of shopping at physical stores. Last year, this activity increased 15% and Kantar expects it to rise another 6% this holiday season.

Popular products will again be consumer electronics, driven by tablet computers like the iPad, electronic readers and other mobile devices. Toys and games will of course be in high demand, but home goods retailers are expected to suffer as economic stimulus funds drove home purchases earlier in the year with tax breaks and appliance refunds.

Expect deals, too, especially since price competition is really the only way retailers can compete against each other in this environment. According to Kantar, prices will decline about 1.5% this season, driven largely by competition among mass merchants like Wal-Mart.